International Debt Situation Paper

The Conference of Churches in Grenada, its local and international partners, met with Minister

Oliver Joseph and members of the government on 1-2 October 2013 to discuss the country’s urgent

debt situation. The workshop welcomed the participation of Grenada Civil Society Organisation, the

Caribbean Debt Network, Jubilee Germany, Jubilee USA and the United Nations Development

Programme.

The Conference of Churches in Grenada emphasises the importance of a people-centred resolution

to the debt crisis.

We make the following recommendations to the Government of Grenada:

1. We urge the government to push for a reduction in Grenada’s debt stock to a maximum

level of 50% of GDP due to the harmful effects of debt above this level on economic growth.

This will require, in practice, an upfront debt stock reduction of approximately two-thirds. It

is essential that debt restructuring in Grenada restore long-term debt sustainability and

support a return to economic growth.

2. The debt restructuring process should involve all external creditors, namely commercial,

multilateral and bilateral. This will ensure fairness between creditors and mean that each

creditor is subject to a lower ‘haircut’ on its claims. This will also be an incentive for all

creditors to take part. We encourage the government to explore options for a

comprehensive solution. These include an independent debt sustainability assessment,

external mediation and a creditors’ conference.

3. We appreciate that the government wishes to resolve the current debt situation in a timely

manner and secure access to new sources of external finance to meet the country’s needs.

This is likely to involve an IMF-supported economic adjustment programme. Before the

government signs any programme, it must seek consensus with the people on the package

of reform measures the country will undertake. This will ensure that the programme

respects the priorities of the local people. We therefore insist that the government share all

documents with the Committee of Social Partners and the public with ample time for review

and debate before any agreements are signed.

4. Looking forward, it will be essential for Grenada to reduce the risk of future debt crises. We

insist that the government strengthen legal and administrative structures to ensure greater

transparency, accountability and participation. Specifically, we insist that the government

commits to a mechanism which monitors and evaluates new debt commitments. This

mechanism must involve the social partners. There is also a need to improve debt

management capacities. These reforms will help put in place the tools to reduce the risk of

future debt crises.

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Rev. Dr. R. Osbert James – Chairman, Conference of Churches in Grenada